NCLT admits insolvency plea against Oyo unit, firm challenges it

Topics Oyo | Bankruptcy | startups in India

Ritesh Agarwal, Oyo founder
The National Company Law Tribunal (NCLT) has accepted a plea against a unit of Oyo Rooms.

Oravel Stays Pvt Limited, the parent company of Oyo Rooms, has challenged the NCLT order which has initiated insolvency proceedings against its unit, called OYO Hotels and Homes Pvt Limited (OHHPL).

The NCLT had admitted the insolvency plea against OHHPL on March 30, 2021, and it was filed by a creditor who claimed that OHHPL defaulted on a payment of Rs 16 lakh.

OYO founder and CEO Ritesh Agarwal on Wednesday took to Twitter to clarify on rumours that the hotel aggregator chain had filed for bankruptcy.

The confusion stemmed from a case filed with the National Company Law Tribunal, which is listed for hearing on Thursday. Agarwal took to Twitter to quash the rumours.

"There is a PDF and text message circulating that claims OYO has filed for bankruptcy. This is absolutely untrue and inaccurate. A claimant is seeking INR 16 Lakhs (USD 22k) from OYO's subsidiary leading to a petition at NCLT," he tweeted.

In a follow on tweet he added: "OYO has paid that under protest and amount already banked by the claimant. OYO has also appealed with the NCLAT about the matter. OYO is recovering from the pandemic steadily and our largest markets are operating profitably."

An OYO spokesperson said," we are surprised to hear that the Hon'ble NCLT has admitted a petition against OHHPL a subsidiary of OYO for INR 16 lakhs in a contractual dispute, which dispute is not even with this subsidiary. We have filed an appeal. The matter is sub-judice and we would refrain from commenting further on the merits of the matter at this stage. We have strong faith and belief in our judicial system."

"According to the order, the creditors of M/s OYO Hotels and Homes Private Limited are hereby called upon to submit their claims with proof on or before 15th April 2021 to the interim resolution professional".

Ahmedabad-based Keyur Jagdishbhai Shah who is part of corporate legal advisory firm Keyur J. Shah & Associates has been appointed as the interim resolution professional for the case. 

Oyo, like other companies in the hospitality space, was hit hard by the pandemic related lockdowns last year. 

In a recent interview to a financial daily, Agarwal said gross margins at the SoftBank-backed firm have climbed back to pre-pandemic levels this year. In India, it is now focusing on profitable geographies and the return of the small business traveller.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel